Saturday, May 12, 2018

"Harvard said to seek sale of South American timber holdings"

From Bloomberg via Farmlandgrab:

Harvard University is trying to sell some of its timberland investments in South America to investors who will share management of the portfolio as the endowment retreats from bets on natural resources.

Harvard Management Co. has approached investors to buy minority or majority stakes in as much as $700 million of property in Brazil, Uruguay and Argentina, and become strategic partners at the same time in an effort to reduce the endowment’s risk, according to people familiar with the matter.

The $37 billion endowment hired investment banker Jonathan Prather from Perella Weinberg Partners Group in February, according to the people, who asked not to be identified because the information is private. Perella Weinberg declined to comment.

Revamped Strategy The move is the latest step in an overhaul of Harvard’s endowment that began in 2016 when the Ivy League school hired Narv Narvekar from Columbia University as investing chief. Narvekar cut the organization’s headcount by almost half, shuttered internal hedge funds, spun out money managers and sold more than $2 billion of buyout and real estate funds.

Narvekar is trying to revamp the natural resources strategy after predecessors made a big wager on the asset class that initially produced solid returns but later backfired. Last year, Harvard wrote down the portfolio by $1.1 billion to $2.9 billion, a loss that included a decision to exit from one of its farm projects in Brazil where it invested at least $150 million.

The portfolio “will take multiple years to reposition,” Narvekar wrote in a September report, adding that “while most assets remain attractive, a few have significant challenges.”

He began unloading properties last year, agreeing to sell a dairy farm in New Zealand with 5,500 cows to private equity firm KKR & Co. for $70 million and a eucalyptus plantation in Uruguay to insurer Liberty Mutual for $120 million.

Vast Portfolio The portfolio is still vast, including farms in Australia, South Africa and Brazil, as well as vineyards in California and timberland in Eastern Europe and throughout Central and South America, according to tax documents and other filings....MORE